Labour shortages: letter to UK Government

From: Richard Lochhead, Minister for Just Transition, Employment and Fair Work
To: Gillian Keegan MP, Parliamentary Under Secretary of State (Minister for Apprenticeships and Skills)

am writing with regard to Scottish Ministers’ recent engagement with employers and representative bodies for sectors including Tourism and Hospitality, Food and Drink Manufacturing and Transport Logistics. As these sectors emerge from the deep disruption of the pandemic, employers are now reporting challenges in attracting and retaining workers, with many directly linking labour shortages to the end of free movement. This is a real concern, not only for the sustainability of these organisations, but for the UK’s economic recovery.

The Scottish Government is taking action where appropriate, however, there is a clear need for the UK Government to listen to the voices of employers and workers, and to work collaboratively with industry and with the devolved administrations, to help address these challenges which have far reaching consequences if dismissed.

I recently chaired a roundtable with industry representatives from a number of sectors who are experiencing specific challenges as a result of the Covid pandemic and further exacerbated by the effects of Brexit. The current backlog of HGV testing is impacting a wide range of sectors and there is real concern that there looms a food shortage crisis if the shortfall of drivers is not addressed as a matter of urgency. The UK immigration system was highlighted by one industry representative as ‘not fit for purpose’.

The Scottish Government recognises that the current labour shortage is not only being experienced in Scotland but extends across the UK.

Much of the current focus is being directed on the logistics sector and, in the main, the industry recognises this as a UK-wide issue and have largely directed their requests to the UK Government.

With the exception of requests relating to access to training and apprenticeships, which my officials are taking forward, many of the requests from the industry touch on reserved matters, such as:

• easing the requirement for a valid Driver CPC qualification for HGV drivers wishing to return to the industry
• seasonal visas for non-UK domiciled drivers to facilitate a quick return to the UK workforce
• deregulation of HGV driver testing to alleviate stress on testing capacity as a consequence of the Covid-related backlog

I am aware that the UK Government believes it can sustain the current level of testing to deliver approximately 1500 passes per week. This is obviously welcome, but there remains some concern about that the rate at which the current backlog of tests will be cleared.

I also understand that you intend to consult on the extension of provisional licence entitlements. Both Logistics UK and the Road Haulage Association expressed a wish for consideration to be given to the wider deregulation of testing from DVSA to accredited training providers to maximise the number of candidates progressing through their test. I would welcome clarification if this is an option under consideration for inclusion in the consultation.

Equally, many of the levers to address this issue rest with the industry itself, such as improving pay and conditions of employment and improving the image of the industry.

However, in attempting to improve both working conditions and the image of the industry, the decision to relax HGV drivers’ hours restrictions is not what was asked for or sought, and indeed sectors argue that, if anything, this will compound matters.

Consequently, I would welcome confirmation of what other initiatives at your disposal are being considered to address this issue.

The COVID-19 pandemic and resulting economic shock provide an important opportunity to reconsider the UK Government’s overall aim of reducing levels of inward migration into the UK, which even before the pandemic was projected to have a deeply damaging impact on Scotland.

I urge you to urgently rethink your post-Brexit immigration policy to prevent chronic skills shortages from undermining the UK’s recovery from COVID-19. The UK Government’s immigration policy fails to consider Scotland’s distinct demographic and economic needs, and completely disregards key sectors that we have relied upon during this health pandemic and will be equally vital to our economic recovery.

It is already clear that your harmful immigration proposals are limiting access to international labour and skills that Scotland needs in order for our economy and communities to flourish. The growth in the number of EU nationals working in Scotland has slowed since the EU referendum. National Insurance Number registrations of EU nationals in Scotland for the first quarter of 2021 were 70% below their pre-pandemic levels. Recent UK Government Immigration statics relating to the year ending March 2021 highlight that only 3,600 visas were granted to EEA nationals, 30% of which were under the Skilled Worker category.

Under your so called ‘points-based system’ the main visa routes are for high earners, with almost no route at all for so-called ‘low-skilled’ workers. The UK Government has made assumptions about the value of different roles in our economy and society, unfairly describing many contributions as “lower-skilled”. The current experience has shown that we must value all skills and that the proposed salary selective approach to future immigration policy is inappropriate, is ineffective, and indeed damaging, in response to the skill requirements of a post-COVID-19 world.

The continued focused on ‘highly skilled’ workers and the UK Government decision to delay the implementation of the majority of RQF 3-5 roles eligible for the Shortage Occupation List will be disastrous for our economy and society and is already risking acute labour shortages. I strongly urge you to reconsider this proposed approach and at the very least allow for the Scottish Government to meaningfully influence the development of the Scottish Shortage Occupation List given the positive impact migration has on devolved areas such as local labour markets and public services.

It is vitally important that we seek to work together on areas where devolved and reserved issues intersect, like migration. There has been no meaningful Ministerial engagement with the Devolved Governments on immigration policy since July 2019. It is vital that this regular engagement is reinstated at this time and I would be grateful if you could work together with my colleague, Jenny Gilruth, as the Scottish Government Minister with responsibility for migration.

Without inward migration the UK faces population decline which will disproportionally affect Scotland: it is highly doubtful whether we can afford an increasing dependency ratio at a time when the tax base will likely have been severely eroded. It is abundantly clear that reducing migrant numbers will detrimentally impact on many sectors and industries that are particularly key to Scotland and the other Devolved Governments, including social care, agriculture, food processing, manufacturing, construction, and tourism.

These are of course not issues which stand on their own, the choices made in relation to our economy have direct and tangible impact across our society. Put simply, these shortages have potential to impact on the supply of essential goods including food, which in turn could lead to increases in prices – putting greater pressure on household budgets. For families already living in poverty, especially at a time when key supports such as furlough and the £20 uplift to Universal Credit are set to be removed, this has potential to push them into crisis and food insecurity.

The actions called for are vital for Scotland to recover from the economic and societal impacts of Covid and the devastating effects of Brexit. I would welcome an urgent meeting with you and colleagues to discuss and agree appropriate and immediate responses to the crisis that is already being experienced by many sectors.

I am copying this letter to Jenny Gilruth MSP, Minister for Culture, Europe and International Development; Professor Brian Bell, Chair of the Migration Advisory Committee; and our counterparts in the other Devolved Administrations, Gordon Lyons MLA, Minister for the Economy in Ireland; and Vaughan Gething, Minister for Economy in Wales.